Italy:
Merkel’s Europe hits the skids in Rome

27 February 2013

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The voters rejected the tutelage of Mario Monti and Angela Merkel, sabotaging the Chancellor's strategy of postponing the euro crisis until after Germany's September elections. To avoid a complete disintegration of the European consensus, the integration process must get back on track now.

Angela Merkel has done everything she could to clear away the danger of new outbreaks of instability in Europe in the lead-up to the German elections in September.

In Italy, she played the Monti card to the full – without going beyond declarations of esteem – anxious as she is to avoid the boomerang effect that caught her on the hop when her unequivocal support of Nicolas Sarkozy helped contribute to his defeat at the polls.

After that, she was forced to deal with his successor, François Hollande. And to keep the markets calm, she even went as far as removing the penalties for France's failure to hold to its commitments to reduce its deficit, formalising the new softening of the rules in a letter to the European Commission – which merely confirms the de facto state of affairs in Greece, Portugal and Spain.

The Chancellor's strategy has not worked. The response of the voters in Italy has dramatically reopened the wound of instability, both inside and outside Italy. As expected, the markets are back on the attack. Europe is trembling and, to limit the damage, is dreaming of putting our country back under trusteeship, of sending it back for good to the outer orbit of countries that are already being closely watched – Greece & Co.

Challenging a united Europe

In reality, the crisis of the electoral hysterics in Italy has moved far beyond the national dimension of discontent and is now pushing the notion of a united Europe, always slipping away, hard up against some awkward truths. It is, rather, pushing its nose into the badly stirred soup of European unity, and the many lumps in the broth are beginning to pop to the surface.

That could put the euro to the test once again. Not so much because of the new eruption of the Italian question, but because Italy, the third-largest economy of the euro club, has touched on the problems of the single currency that the Union, until now, has tried to patch up in a hurry – or rather, hastily to sweep under the carpet.

The vote on Sunday and Monday certainly speaks volumes about the general exasperation with austerity and taxes in a country knocked low by the recession and unemployment. It expresses above all the revolt against the mandarins of a system that, having decided to enter the circle of the single currency, failed to make the choices it had to make to stay in it. There was no modernisation. There was no self-reform. There was no liberalisation to become more competitive and in tune with its partners. This system created in the Italians the illusion that the country could still muddle on by as it always had, perpetuating monopolies, from the smaller to the juiciest, without ever paying the price.

The Italians are not the only ones in Europe, though, who failed to weigh up the consequences of getting into the single currency. This is what has given rise to the dilemma of "More Europe, or less Europe", and "To be or not to be in the euro." It's not a dilemma solely for the Italians. It is, though, a taboo subject much more widespread among the euro club members and those who want to enter the club than one would believe.

Festering sore

This sore has continued to fester for four years during the crisis, while the club seems unable to come up with any answer other than the dogma of austerity and the shock reforms forced by the Germans, yet without having the shock absorbers of growth and still less those of intra-European solidarity. Not to mention the refusal to go through the normal democratic process – in the name, of course, of a technocratic option that is supposedly more efficient.

All this while the north-south divide is getting worse and while Europe and its industries continue to lose ground on the global market. The sacrifices are pleasing no one. And even less so those who, more or less everywhere, note that "Europe has the money to save the banks but not to restore growth and employment."

The markets, on the other hand, need some certitude about the future and integrity of the euro before they will calm down again. Will the guarantee offered by the President of the European Central Bank, Mario Draghi, be enough for that? And until when, now that Italy risks opening Pandora's box and letting everyone get a very look indeed at the many unresolved problems of the euro and the EU?

Accelerate euro integration

While the popular consensus on Europe is crumbling all across the continent, the single currency, ironically, needs to resist its internal troubles and accelerate its integration by ratifying the triple union in banking, budgeting and policy. It needs to decide once and for all if it will truly accept and see through to the end, a shared destiny at all levels and under the German model, which is now dominant and pervasive.

The German elections and the European elections in 2014 have temporarily put the debate and the negotiations on ice, pushing back for a few months the moment of truth, putting off the choices among the too many contradictions that Europe is made of. But the worries remain, and they are even growing in many parts of Europe. Even in France under François Hollande.

Will the easing of discipline conceded by Angela Merkel be enough to calm the markets and hold on until September without major upsets? Italy has sounded the alarm, a thundering alarm. It would be dangerous to ignore it. For Europe and for everyone.

in the EU, Berlin’s cold reality and its insistence on reforms are perceived as a hostile diktat. Neither Monti or Bersani — nor indeed Berlin or Brussels — has been able to communicate to the Italians that the drastic regime of austerity will result in a cure.

Clever politicians should avoid following Merkel’s economic lead, remarks journalist Eric Bonse in Cicero. Nicolas Sarkozy in France, Mark Rutte in the Netherlands and now Mario Monti have demonstrated that those who “take lessons from Angie... learn how to lose!“

It remains to be seen why Merkel appears to be unaffected by all of this. But let no one say that the scorched earth she has left behind her has nothing to do with her policies...

However, Frankfurter Allgemeine Zeitung is eager to do just that. The conservative daily deplores the “degenerate political parties that will continue to plunder” Italy —

The destabilisation of the nation and the European Union was only made possible by a baffling voting system established by cunning politicians — during the Berlusconi era — to protect the interests of Il Cavaliere. [...] Let’s not forget that the four candidates and Italy’s president have a combined age of 357, a historic record in these elections. This country continues to be a paradise for pampered politicians while millions of young Italians are unable to find work, or training, or places in functional universities. These elections will change nothing for them.